Quest Buying AmeriPath for $1.23 Billion

Medical testing company Quest Diagnostics Inc. said Monday it will buy diagnostic testing company AmeriPath Inc. for about $1.23 billion in cash.

The $2 billion deal includes about $770 million in debt.

Quest plans to pay for the acquisition, refinance AmeriPath’s existing debt and the debt from the HemoCue acquisition completed earlier this year with the proceeds of a new $1 billion one-year bridge loan and a new five-year $1.5 billion term loan, both committed to be underwritten by Morgan Stanley (nyse: MS – news – people ). The bridge loan is expected to be refinanced shortly after the closing.

“This acquisition will establish our leading position in cancer diagnostics with a focus on dermatopathology, anatomic pathology and molecular diagnostics,” Quest Chairman and Chief Executive Surya N. Mohapatra said in a statement.

AmeriPath is controlled by Welsh, Carson, Anderson and Stowe IX LP.

Quest said the deal should add modestly to 2008 earnings per share, before anticipated charges related to the transaction.

The acquisition is expected to close during the second quarter.

SOURCE: AP